Russia Continues To Buy Gold

April 28 (Dow Jones) — Russia’s central bank is continuing to make steady gold purchases, while sales by signatories to the third Central Bank Gold Agreement meanwhile remain negligible, the World Gold Council said Thursday.

Russia added 8.2 metric tons of gold to its reserves between December and February–the most significant change in reserves reported by any country, the WGC said.

It appears to be continuing “its long-term program of gold accumulation,” with sustained buying primarily in the domestic market, the industry body added.

At the end of February the Russian central bank held 7.3% of its reserves in gold, at a total of 792.3 tons, according to data the WGC collected from the International Monetary Fund and other sources.

Sales of gold by CBGA signatories have meanwhile accounted for less than one ton so far during the second year of the agreement, which began in September, the WGC added. The agreement, which covers the gold sales of the Eurosystem central banks, Sweden and Switzerland from September 2009 to 2014, states that annual sales will not exceed 400 tons and total sales over the period will not exceed 2,000 tons.

Other substantial purchases between December and February included a reported 7-ton reserve increase in Bolivia, taking the country’s total holdings to 35.3 tons, or 15.1% of its overall reserves, the WGC said.

“While Bolivia has not made any public comment on this increase in gold holdings, it is very likely that the central bank has simply decided to restore its gold holdings relative to its growing foreign currency reserves, similar to other recent emerging market central bank purchases,” it noted.

The data was released in the council’s regular statistical update on gold reserves in the official sector.

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Mario,
The zero interest rate is not essential to MMT. The essential MMT point here, as I understand it, is that interest rates are a policy variable and can be pegged at a low number. 3/8ths for 90 days and 2 point something for long bonds sound pretty low to me.

And I really agree it makes MMT solutions through fiscal intervention much more palatable for non-MMTers since a low interest rate (less than the growth rate) avoids the exploding debt to gdp ratio fiscal conservatives (and deficit doves) fret about.

It seems he still believes though that tax revenues actually “pay for things” which seems to be why he’s so upset with Bernake supporting the tax cuts when they should be spending instead.

Other than that though…he’s spot on it seems to me and ironically blends MMT ideas very well into the current institutions and possibilities we have available to us today…his ideas and suggestions seem much more plausible and would be much more widely accepted by the public versus our ideas of going to no-bonds, etc. LOL!!

Warren…do you know these guys? You should hook up with them…and maybe let them know how government spending works and they can help MMT with getting some policy recommendations that might actually go somewhere…a more consumer conscious Fed would be widely appreciated by the public I think.

After that article was published, I sent him a link to Warren’s book and he wrote back mentioning that he’d met Warren in Miami (late 90s IIRC) back when he taught at U-M. And since every MMT conversation loops back to Bill Vickrey eventually, Canova mentioned also his friendship with Vickrey and forwarded an interesting article he’d written about him.

Critics of Vickrey’s full-employment macroeconomic vision have noted that his Nobel was awarded not for such progressive views but for his earlier work in microeconomics. This article connects Vickrey’s early theoretical work with his full-employment blueprint.http://papers.ssrn.com/sol3/papers.cfm?abstract_id=929221

Maybe this is the right thread to bring up again the question that is still puzzling me about financial assets.

Gold might not be a financial asset since it has no corresponding liability, but it is an asset in the financial system nevertheless.

How does it work within your framework? Because it seems to me that central banks buying and selling gold correspond to removing and adding NFAs. And since the price of gold is market determined, it would mean the private sector creates NFAs endogenously.

I am not taking into account changes in the supply of gold to keep things simple.

Seems to me that gold is a real asset. When a cb buys gold, it creates reserves to do so. So Russia buying gold puts newly created rubles into the global economy, and someone has to want to save in rubles to do so. This is essentially the same as the cb buying another real asset, but cb’s are generally only permitted to buy gold rather than other real assets.